Saks Off 5th, Saks Fifth Avenue’s off-price concept, has launched The Next Generation, a collection of five new fashion brands “designed in New York City and developed with a fresh aesthetic and fashion-conscious consumer in mind.”

Apparel off-pricers, from Nordstrom Rack to T.J. Maxx, have also developed private labels, but they tend to work as margin builders rather than traffic drivers and differentiators, the apparent goal of the Next Generation collection for Saks Off 5th.

“Saks Off 5th is a world-class destination for style and on-trend products at a great value,” said Tom Ott, chief merchant, Saks Off 5th in a statement. “With the launch of The Next Generation brands and the vast assortment available, we’re able to offer our customers a differentiated range of quality fashion and styles at competitive pricing.”

The five brands — Ava & Aiden, RENVY, Pure Navy, NHP and Russell Park — appear to be brands initially brought to market by Gilt, the flash-sales pioneer. Gilt was acquired by Hudson’s Bay Co., Saks Fifth Avenue’s parent, in January 2016 and sold to Rue La La, a competing flash site, in June 2018.

“When developing the collections, we wanted pieces to maintain classic wearability while ensuring they felt current, and for several of the brands, trend-forward,” said Irene Newman, head of design, Hudson’s Bay Company. “It was important to combine stylish designs with quality fabrics and flattering fits while maintaining attainable pricing.”

Off-pricers have generally differentiated from each other by their merchandise mix, including private labels as well as items “specially made” by major vendors. Greater differentiation may be needed with the rapid expansion of existing players and new arrivals such as Macy’s Backstage.

In closing 10 of its 37 off-price Last Call stores last September, Neiman Marcus said fewer stores would help its off-price concept differentiate “by giving customers access to a larger amount of merchandise sourced from the company’s full-line channels.”

DISCUSSION QUESTIONS: What do you think is behind the move by Saks Off 5thto launch The Next Generation collection? Will the private label brands effectively enable Saks Off 5th to create a point of difference with Nordstrom Rack and other off-price rivals?

I am thankful that my area of concentration is not merchandising. It baffles me why a retailer would operate an off-price model and then put private-label merchandise in the assortment. Isn’t the idea to sell the known brands at a discount? And while we are at it, how many such stores should there be per retailer?

Smart move, especially since more than 70 percent of households are essentially living as “have nots” when it comes to spending power. Saks Off 5th is creating stylish options that make it fun and worthwhile to shop. Lower-priced apparel needs an infusion of new news and product choices. Kudos to Saks.

If the fashion is on point and the quality is there, this could indeed be a differentiator. It makes perfect sense. If a shopper is going to Off 5th, they are looking for Saks fashion but at off prices. They are not really there to pick up a cheap private label piece. And that’s my 2 cents.

The original concept for outlet stores was perfect. They provided a home, an outlet, for end-of-season or residue inventory so that the “regular price” store could present the best possible regular price face to the customer. These days you sometimes have to say “regular price” with a bit of a snicker. Nordstrom and Saks still have a regular price business, so I think it’s doubly important that their outlet stores are used first and foremost as homes for residue inventory. “Sweeping” the regular price stores often is one of the healthiest actions they can take. Still room for more inventory in the outlet store? Great. Design and source product that is still consistent with the parent brand and you’ve got both a margin builder and another reason to visit the outlet store. Win + win. But if the private label product is allowed to slow the sweep process, then lose + lose.

It’s really not! It’s just a big space filled with a relatively random assortment of merchandise! Nothing wrong with that per se, but let’s be realistic!

As for the own labels, they are a sensible way of providing some differentiation in an off-price market that is becoming more crowded and competitive. They still won’t make Saks Off 5th world class, but they will help in improving the offer.

Not be a nay-sayer here, but Saks building a private-label brand for a market (next-gen) that currently is not their target market will be difficult. Focusing on securing better brands and designer collaborations for the outlet side would prove to be a more successful path. People shop outlet for name brands at lower prices not to secure inexpensive fashion from the unknown. Macy’s tried to secure next-gen with Bar III and it never resonated with the proposed market. Let’s not forget when Saks walked away from private label (Real Clothes) around 2004-2005 leaving their customers high and dry. I would like to be proven wrong but this is a misstep for Saks.

There are probably a couple factors driving Saks Off 5th to launch private label brands for its off-price stores. Private label brands that are geared towards younger demographics will help expand the target audience of shoppers that shop at the Saks Off 5th stores.

Another factor is price competition. Rather than selling commodity brands (items that are available at other chains) that are not selling at its Saks 5th Avenue stores or are out of season, private label brands are not subject to price comparison. Private label brands, if well received by customers, can also drive store traffic if the brands are not available anywhere else. Private label allows them to create a brand that can’t be disintermediated. All retailers need to create a brand that can’t be eroded by Amazon. This is a wise move by Saks.

I’m kind of with Bob in my perplexity about merchandising strategy. Seems to me that “regular pricing” is the crypto-currency of retail. Somebody just makes it up. It’s backed only by air.

In my limited luxury brand buying experience, I’ve come to the conclusion that “quality” and “cost” are not directly correlated. Too often the relationship is inverse. That came to me when I bought a Jaguar years ago. I also have $200 suits that lasted a lot longer than $900 ones.

Why on earth does it cost more to manufacture things that look nice, modern and different? Sure, perhaps ostrich or crocodile skin costs more than cowhide, but after that they all end up on the same sewing machine.

I think the timing and positioning are just right for Saks Off 5th. The apparel industry’s audience is becoming increasingly fragmented, and this has the opportunity to capture new markets without damaging flagship brands. Competition is absolutely fierce, but the Saks heritage will see the collection rise to the challenge.

Not sure those commenting on this move are giving proper credit to the overall changes in the retail market resulting from the broad distribution and pricing transparency evolving from Amazon and other e-commerce channels.

This move should not be viewed as simply a response to other off-price retailers, who changed some time ago from simply being an outlet for branded merchandise that is out of season and/or from overstocks.

Private label merchandise gives a retailer (or a brand) pricing and distribution control that provides protection from undisciplined channels and sources. Private-label merchandise might even be offered to some distribution outlets on a limited and controlled basis to help build awareness and appeal.

It’s not immediately clear to me why “Off 5th” doesn’t do well, while the parent does. (And not clear to ownership, either, I imagine, though this move would suggest they have an idea). But I don’t think this is the solution: the whole point of outlets — at least initially — was to offer (originally) high-priced branded merchandise at low prices. Sometimes it was overstocks, sometimes last-seasons fashions, but still high-end; setting up low-end labels completely contradicts this premise: if people want that, they can shop at JCP … or Walmart.

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"Lower-priced apparel needs an infusion of new news and product choices. Kudos to Saks."